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By: Simon Commander, IE School of Business in London.
Big Tech’s ability to influence electoral outcomes and then work in concert with political power is perilous for political and economic competition.
As he left office, outgoing US President Joe Biden claimed that the USA was on the road to oligarchy.
Shortly thereafter, Trump’s inauguration saw some of the wealthiest businesspeople in the world lined up brazenly ahead of his cabinet and other political appointees.
This parade of wealth and the mutual genuflection between political and business power appear to signal a new age of proximity, if not collusion, between the two.
While such ties are common in many economies – my recent book documents how that plays out through Asia – the obvious question is whether the US is converging towards the same web of connections and their insidious consequences – corruption, market power and extraordinary concentrations of wealth?
If Asian large family businesses might have learnt something from the US’ Gilded Age, now perhaps the US is learning from Asia?
Donations by businesses to politicians and political parties and the lubrication of politics by money have long been a major feature of the US. A careful study revealed that over seven percent of charitable giving by US corporations has been politically motivated.
Elon Musk’s US $200m-plus donations to Trump’s campaign in 2024 was of a larger order than most. But probably more consequential is Musk’s ownership of X and Jeff Bezos’ ownership of The Washington Post.
Those social media handles offer outsized influence in helping elect a candidate seen as biddable, whether now or in the future. But if donations are seen as a way of securing political power for the susceptible, it is what happens thereafter that is particularly interesting.
What appears to be happening in the US is not only an explicit shaving of the distance between business and politics (take the issuance of Trump-family crypto on the eve of his inauguration as a peculiarly egregious example) but a particularly pronounced shaving for certain sorts of businesses.
This is sometimes dressed up in philosophical terms: veneration of the entrepreneur and the liberty to operate. The main characters in this script are the shepherds of the public flock – and, of course, (though less stated) public monies.
Nevertheless, this is tempered – at least to some extent - by Trump’s populist pretensions of acting in the interests of working people and, therefore, their earnings. How that tightrope is walked will be key.
By its nature, that technology – generative AI being the latest – seeps into the rest of the economy and is harnessed to older industries, such as the defence sector. Peter Thiel’s $180 bn Palantir Technologies’ operations are one such example. And the harness that draws them together includes public contracts and/or light touch regulation.
Does putting these elements together equate to oligarchy?
The core content of the latter – identified by Aristotle in third-century Greece – is the application of ruthless self-interest to the exclusion of the wider interest. That can take a variety of forms, but in a modern economy that normally means the accumulation and protection of market power by keeping competitors and regulators at bay.
In the US the stakes are huge. The cumulative wealth of the top 10 individuals is currently more than $1.5 trillion. Most of these people are mainly owners of or invested in technology-based companies.
Indeed, the market capitalisation of the US companies whose owners or CEOs were on display at the inauguration alone amounts to around 20 percent of total US market capitalisation.
But there are some significant differences from Asia or other regions where politics and business are closely joined.
Even these massive US companies are still relatively small compared to the size of the total economy.
The top 5 tech companies ranked by market cap (Microsoft, Apple, Amazon, Alphabet, Nvidia) had revenues in 2024 that were equivalent to six percent of US GDP. Contrast that with Samsung whose share of South Korean GDP is over 20 percent!
These companies may have a lock-hold on specific sectors or activities – hence, for instance the Federal Trade Commission’s case against Google with respect to search – but they are not diversified behemoths of the sort common in Asia.
Does that mean we should not worry about the nexus of connections and market power in the US? That would be the wrong conclusion.
One reason is that the companies that have grown the most rapidly are mostly those able to exploit large network effects.
Further, if we think of AI as the latest General-Purpose-Technology (GPT) then it is clear why the major firms are so invested in it.
Although OpenAI and its ChatGPT have reaped clear first mover advantage, the underlying model looks to be less monopoly than monopolistic competition with cut-throat rivalry as each player searches for advantage.
Even so, that has the potential for delivering super-profits to the leading players, with considerable scope for market consolidation to occur over time. Much will depend on whether regulatory and competition agencies are able and willing to act.
Even after a period of relative policy activism from former Federal Trade Commissioner Lina Khan, the omens are not good.
In addition, Trump seems willing to exert pressure on the European Union to try and force it to back away from its more muscular approach to market power.
In sum, Big Tech’s proprietors, by having the ability to influence electoral outcomes and then work in concert with political power to ensure little or no public policy pushback to the expansion of their business vehicles, have set things up in a way that is perilous for competition, political and economic.
A further consequence will, of course, be yet more wealth inequality.
Already, estimates of the wealth held by the top one percent in the US are high (US$11.6 million on an average in 2025) and rising. The top one percent of Americans have about 16 times more wealth than the bottom 50 percent. The US Gini index for wealth has been estimated to be roughly equivalent to Saudi Arabia.
At the same time, the gaps in income between skilled personnel working in dynamic sectors, like technology, and those in other parts of the economy will widen. The money-education nexus that is already so pronounced a feature of American education will accentuate this divide.
Finally, would a plutocratic-oligarchic path be a sustainable one?
The disparities – above all in opportunities – and their continuation across generations might suggest considerable space for opposition from coalitions of the excluded and disenchanted. But equally, it might suggest temptations of a more explicitly authoritarian nature.
Originally published under Creative Commons by 360info™.
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